eNerds chases growth strategy in Sri Lanka

Friday, 14 March 2014 02:16 - - {{hitsCtrl.values.hits}}

High labour costs prompt new business strategy

www.theage.com.au: Australian IT services company eNerds has changed its business model for an expansion to Sri Lanka to battle the high cost of labour domestically and stay competitive in a fast-growing industry. The company, which provides tailored technology services to small and medium-sized businesses, has opened a network operations centre in Sri Lanka to monitor, manage and support clients’ infrastructure around the clock. “Australia is expensive because of the cost of labour in professional services, and the time difference meant it was hard to find staff and difficult to set up here,” said eNerds Chief Executive Jamie Warner. A third of eNerds’ 35 staff are based in Sri Lanka. This ratio will remain static as the company pursues a high-growth agenda to become an organisation of 500 people within five years. Warner is targeting revenue of $ 6 million in 2014-15, followed by 25% year-on-year growth. The move to Sri Lanka is driven by the need to proactively solve clients’ technology problems before they interrupt business continuity. eNerds has improved margins by increasing the gap between fixed income and fixed costs, of which labour is a significant component, Warner said. “Businesses have to change their model to ensure they have the right capacity and margin to be successful in the future.” Support software The company’s change of business model would improve margins and ensure it stayed ahead of competitors who did not provide similar proactive services. It chose Sri Lanka after conducting due diligence and investigating where other IT service providers, including Dell and Exotel, were going. eNerds has launched its own IT support software packages called NerdSuite, which includes customer relationship management, work-flow management, monitoring and support applications, web portals and reporting engines. eNerds also plans to commercialise its own brand of IT support software packages in the United States later this year. However, for brand clarity, it will sell the cloud-based packages under a different company name. Warner is looking for merger and acquisition opportunities, with a view to bulking up by buying smaller versions of like-minded tech companies. “We’ve been looking this year at a few, but haven’t pushed the button on any yet,” he said.